The District will soon join its neighbors in Maryland and Virginia as one of the few jurisdictions that regulate non-compete clauses. The District, however, will impose the broadest non-compete prohibition in the country, barring, with narrow exceptions, all simultaneous and post-termination employment restrictions for employees in the District. Maryland only prohibits the use of non-competes for employees who earn $15 per hour, while Virginia bans non-competes for employees that earn $1,137 per week (or $59,124 per year). On July 27, 2022, Mayor Muriel Bowser signed the Non-Compete Clarification Amendment Act of 2022 2022. The Amendment applies to the Ban on Non-Compete Agreements Amendment Act. Absent action by Congress, which is not expected, the law will go into effect on October 1, 2022.
The law prohibits employers in the District from requiring or requesting that District employees agree to non-competition provisions and requires employers to provide notices informing covered employees. Under the Act, “[n]o employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement.” The prohibition against non-competes applies to non-competes entered on or after October 1. As such, existing non-competes and non-competes entered prior to October 1 date are unaffected. Importantly, “Non-compete” is broadly defined as any provision that “prohibits the employee from being simultaneously or subsequently employed by another person, performing work or providing services for pay for another person, or operating the employee’s own business.”
Covered employees include those that either 1) spend a majority of their work time working in the District for their employer, or 2) those employees whose employer is based in the District and the employee “regularly” spends a “substantial amount” of work time for the employer. The law includes some carve-outs to the ban, primarily employees whose total compensation per year is more than $150,000, or $250,00 for medical specialists. The law still allows employers to bar employees from using or disclosing confidential and proprietary information during or after employment. Employers who still wish to provide eligible employees with non-competes must provide the non-compete in writing to employees at least 14 days before employment or execution of the agreement.
Employers should act now to ensure they do not run afoul of the non-compete ban once it becomes applicable. Offit Kurman attorneys are available to advise on these issues.
Daniel Trujillo Esmeral is an attorney in Offit Kurman’s Labor and Employment and Restrictive Covenants and Trade Secret Protection practice groups. He focuses his practice on providing proactive and preventative counseling and defending businesses throughout the litigation process. The dual nature of Mr. Trujillo Esmeral’s practice allows him to partner with clients to come up with solutions to their legal issues, big and small, while they focus on growing their businesses. Mr. Trujillo Esmeral has extensive experience drafting non-compete, non-solicitation, and confidentiality and trade secrets agreements and litigating to enforce or combat such agreements in state and federal courts through the DMV and nationwide.
ABOUT DANIEL TRUJILLO ESMERAL
Daniel Trujillo Esmeral is an attorney in Offit Kurman’s labor and employment practice group. He focuses his practice on providing proactive and preventative counseling and defending businesses throughout the litigation process. The dual nature of Mr. Trujillo Esmeral’s practice allows him to partner with clients to come up with solutions to their legal issues, big and small, while they focus on growing their businesses.